Downtown is the heart of the city, and if the downtown is vibrant, growing and dynamic, it means the whole city is growing, vibrant and dynamic.
Since the Tennessee Aquarium opened in 1992, nearly $3.8 billion of tourism, retail and office development has been added in Chattanooga's central city.
But of the estimated 45,678 people who work in the urban core, only 3.2 percent live there.
However, the number of people living downtown in apartments, hotels and new homes is projected to be more than double from a record $400 million of new development underway or on the drawing board over the next couple of years.
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Work on Westin hotel to start this fall in downtown Chattanooga
Major downtown projects
* Cameron Harbor along Riverfront Parkway, a $79 million complex with 235 apartments and 71 single-family homes* Douglas Heights apartments at Douglas and 10th streets with 690 student units* Chattanooga Choo Choo, 97 apartments units, two new restaurants, new music venue and seven acres of future development* 700 block of Market St., $28 million project with 125 apartments and new retail stores* Former BlueCross BlueShield headquarters converting to Westin hotel with more than 200 rooms* Main and Market retail and apartment complex with 68 units* Apartments at 1400 Chestnut St. with 210 rental units* Chattanooga Bank building converted to 140-room luxury hotel* Maclellan Building converted to 90 apartments* Former BlueCross office on Chestnut Street converted to more than 50 units in the Clemons Lofts* Tomorrow Building at Patten Parkway and Georgia Avenue, 41 units* UTC plans a 600-unit new student dorm at Vine and Houston streets* Vision Hospital plans 90-room boutique hotel near the Walnut Street Bridge and an 84-unit apartment complex on the North Shore* Unum is working with a developer to build apartments and retail shops on one of its parking lots on Vine Street* The Fleetwood Coffee Co. is being converted into offices and 25 loft-style apartments
More downtown development
In the next two years, developers in the central city are planning to add:* 1,500 new apartments* 1,331 more beds for UTC students* 526 hotel rooms* $400 million of new private investmentSource: River City Co.
River City Co., the nonprofit agency that has helped spur and coordinate much of Chattanooga's downtown revival, calculates developers will add 1,500 apartments, 1,331 student beds and 526 hotel rooms in the urban core by 2017.
"For 30 years, we've focused on building a vibrant downtown," River City President Kim White told the Chattanooga Rotary Club on Thursday. "Now we are in the process of filling in many of the gaps with people who not only want to work and play downtown, but live downtown, as well."
River City's goal is to grow the number of downtown residents from 3,700 today to more than 12,000 within the next decade.
White said downtown living especially appeals to young adults and empty nesters. According to the Nielsen Co., 62 percent of millennials prefer to live in mixed-use communities found in urban centers, closer to shops, restaurants and the office.
"This generation, as well as retirees, desires a different kind of life," White said. "They want to be socially engaged and live closer to where they work. They want to walk or cycle to work. All of these things aim at high-density, urban-style living."
But higher land and building costs mean developing downtown housing at affordable rates isn't easy. To help, River City helped convince the city and Hamilton County to grant property tax breaks for investments in rental housing. Developers must set aside at least 20 percent of the rental units to people who earn 80 percent or less of the median income in Chattanooga, or about $31,000 a year.
Groups such as the Chattanooga Tea Party and Accountability for Taxpayer Money call the tax breaks unnecessary and a type of corporate welfare. But White said only five such breaks have been granted for downtown apartments so far. She called the program "essential" and "effective," as evidenced by the recent surge in new projects.
More residents will help bring more retail and entertainment, which helps attract more visitors and businesses, White said. And 500 new hotel rooms will help draw more conventions and overnight guests to the central city, she said.
If all of the planned projects proceed, the investment would be more than triple the $120 million spent on the 21st Century Waterfront project 15 years ago.
"Downtown is the heart of the city, and if the downtown is vibrant, growing and dynamic, it means the whole city is growing, vibrant and dynamic," said Charlie Arant, president of the Tennessee Aquarium and chairman of the River City Co.
Arant said delegations from more than 50 cities around the world have come study Chattanooga's downtown revival.
The city has not been immune to economic shifts that cut thousands of jobs at some downtown employers and moved hundreds of other workers from downtown offices to working at home. After BlueCross BlueShield of Tennessee built its $299 million campus atop Cameron Hill and vacated 10 offices around Chattanooga, more than 1 million square feet of office space around town was vacant - much of it downtown.
White said there are no plans at present for more downtown offices.
Indeed, much of the new development will come from converting vacant office buildings into hotels and apartments.
New hotels are planned at the former BCBS headquarters building on Pine Street; the Chattanooga Bank Building along Eighth Street and a former dental office near the Walnut Street Bridge. The Maclellan building on Broad Street; a former BlueCross office on Chestnut Street; the former Fleetwood Coffee Co. building on 11th Street and what used to be Yesterday's restaurant and an office building on Patten Parkway are being converted, at least in part, to apartments.
White said Hamilton County's Mayfield Annex building, which is for sale, also may be turned into apartments.
Downtown has 1,271 existing apartments, White said. In the next year and a half, 2,831 more apartments or UTC student beds are expected in the central city or on the North Shore.
"We have a unique window of time where the financial markets, the development opportunities and the demand for downtown living are coming together," White said. "This has created the opportunity to fill some significant gaps in our city."
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.